Tag Archives: currencies

MARKETS: Coronavirus crashes currencies

MARCH 26 (The Bulletin) — Currencies across the region crashed to their lowest levels as the full extent of the threat of the coronavirus to the world’s economic system became apparent, the US dollar strengthened and governments in Central Asia and the South Caucasus began to fret whether they would be able to deal with a major health crisis.

The Kazakh tenge was trading down 13% at 447.8/$1, off a low of 456/$1. It follows the price of oil and the Russian rouble closely and with both bouncing around at lows, the tenge was always going to get dragged down. It has never been this low and before the oil price collapse of 2014 was valued at around 188/$1.

The Georgian lari fell by more than 15% to 3.3387/$1, also an all-time low. The currency has been weak for more than a year but policymakers had thought it was beginning to strengthen before the impact of the coronavirus turned it onto a downward trajectory.

ENDS

— This story was first published in issue 440 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Coronavirus smashes in the region’s currencies

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TBILISI/March 26 (The Bulletin) — Currencies plunged across Central Asia and the South Caucasus because of the combined impact of the Covid-19 virus, a collapse in oil prices and a surge in the value of the US dollar.

Central Banks raced to pump money into their systems and sell off foreign currency assets to prop up the value of their currencies as the impact of the pandemic on business and economies across the globe became apparent.

In the past couple of weeks the region’s two most-traded currencies, the Kazakh tenge and the Georgian lari, have lost around 20% of their value.

Airlines have stopped flying into the region, land borders have closed and projects and foreign direct investment that had been pledged have been put on hold.

ENDS

— This story was first published in issue 440 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

MARKETS: Georgian lari rises, Kazakh tenge falls

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MARCH 2 2020 (The Bulletin) — The Georgian lari and the Kazakh tenge, the region’s two most traded currencies, moved in opposite directions over the past week. The Georgian lari continued on its bull run, rising 1.5% to 2.78/$1. This is the highest it has been since mid-June 2019.

The lari, which had been bouncing around all-time lows of 2.98/$1 has been strengthen by the Central Bank’s interest rate rise and proclamations that it is going to take on rising inflation.

The tenge, instead, fell by 1.5% to 381.65/$1, near a 2020 low.

It followed global markets down and, in particular, oil which has been hit by fears that the spread of the coronavirus will undermine markets.

In other news, the Kyrgyz Central Bank raised its key interest rate by 0.75%, to fight what it said was rising inflationary pressure. The interest rate rise lent support to the som which remained steady despite turmoil in global markets.

— ENDS

— This story was first published in issue 438 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Markets: Currencies rise

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DEC. 27 2019 (The Bulletin) — Most currencies in the region pushed up with the Georgia lari hitting 2.8335/$1 on Dec. 12, just after a well-trailed interest rate rise. The Georgian Central Bank has been hiking interest rates rapidly over the past few months to try to dampen inflationary pressures. Official inflation now measures 7%, partly pushed up by the weak lari.

The Georgian Central Bank said that inflation would not weaken until March 2020. At 2.8335/$1, the lari hit its strongest level against the US dollar since the beginning of May. By Dec. 27, the lari had weakened slightly to 2.8638/$1.

Other Central Banks kept their interest rates steady as inflationary pressures were considered to be far less of a worry. On Dec. 10, the Armenian Central Bank said that it would keep its key interest rate at 5.5% because inflation measured 1%. Two weeks later, on Dec. 23, Kyrgyzstan’s Central Bank said it was keeping its interest rate at 4.25% because inflation was steady at 2.9%.
ENDS

— This story was first published in issue 432 of the weekly Bulletin on Dec. 27 2019

Markets: Currencies steady after downward pressure

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NOV. 27 (The Bulletin) — After a couple of months of sustained downward pressure that pushed currencies to some of their lowest levels, markets have slowed and steadied. Most currencies failed to shift significantly over the past week, with the exception of the Kazakh tenge which strengthened by 0.7%. It has pulled back from near an all-time low of 389/$1 and is now valued at 386.4/$1.

On the Central Bank news front, the Trend news agency has been reporting that the Uzbek Central Bank is considering lowering interest rates next year to give borrowing and spending a lift. It is held back by rising inflation, though, with analysts estimating that the real inflation rate if around 14 – 16%.

In Bishkek, the Central Bank said that it was going to keep its key interest rate steady because inflation had finally started to pick up. It said that inflation measured 2.5% in mid-November and would rise to 3.5% by the end of the year. It has an inflation target of 5-7%.

ENDS

— This story was first published in issue 430 of the weekly Bulletin.

US dollar strength pressures currencies

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SEPT. 24 (The Bulletin) — Currencies across the region ticked downwards, along with most Emerging Market currencies, because of renewed strength in the US dollar on expectations of an interest rate rise in December.

The soft weekly session forced the Azerbaijani manat, the Georgian lari and the Kazakh tenge to near year-lows. The manat was trading at 1.7170/$1, its lowest since mid-August; the lari was at 2.48/$1, its lowest since the start of August; the tenge was trading at 341/1/$1, also its lowest since the start of August.

The is also more trouble for currencies in the region brewing with news of a banking bail out in Russia. The bail out, itself, doesn’t bode ill but the prospect of the Russian economy being weaker than expected does. Russia’s economy is the regional economic driver. When it ails, so does the Central Asia and South Caucasus region.

The Uzbek soum, liberated from its US dollar peg at the beginning of the month, appears to have found its footing at around 8,077/$1. It has traded in a tight corridor since then.

ENDS

— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.